ROCKFORD — The city has the necessary funding to begin a $13.6 million transformation of the former Ingersoll factory on South Water Street into an indoor sports complex.

Rockford will apply for a $4 million state grant that, if approved, would complete the funding puzzle. The city has other funds it can tap if the grant doesn’t pan out.

The Ingersoll project represents half of “Reclaiming First,” a roughly $37.5 regional economic development partnership that aims to reclaim the city’s dominance in the amateur sports tournament business. Such tournaments attract thousands of visitors to the Rockford area each year and pump millions of dollars into the regional economy.

The other, much costlier, component of Reclaiming First is an expansion and modernization of Sportscore Two and the Indoor Sports Center, the Rockford Park District’s soccer mecca on East Riverside Boulevard in Loves Park. That project still faces a sizeable funding gap.

The Ingersoll makeover is no longer a question mark, said City Administrator Jim Ryan. The city aims to start renovating the riverfront building next year for an opening sometime in 2014. The city will launch a search for architect and engineering services in the coming weeks.

A City Council Committee gave city staff a preliminary OK Monday to apply for the $4 million state grant. City officials hosted a recent meeting at City Hall to discuss the grant program with representatives of the Illinois Department of Commerce and Economic Opportunity.

The meeting went well, Ryan said, and “we’re very confident that we’ll be able to get the grant.”

If not, the city would tap its Redevelopment Fund, which is fueled by a city food and beverage tax and is intended to ignite economic development projects. The Redevelopment Fund has been paralyzed by debt for years, but will produce positive cash flow next year.

The resurrection of the Redevelopment Fund was made possible by the City Council’s approval this summer of a restructuring of debt and subsidies tied to the city’s downtown entertainment venues: the BMO Harris Bank Center, Coronado Performing Arts Center and Davis Park.

The sports complex would gradually ramp up to accommodate 22 athletic tournaments a year, attracting 100 teams, 80 of which the city estimates would come from outside Illinois. The result? An $8.4 million a year increase in visitor spending, $6.8 million of which would come from out-of-state residents.

“You hear about Indiana and Wisconsin stealing economic development opportunities from us,” said. Patrick Zuroske, the city’s capital program manager “This gives us the chance to bring in people from Minnesota and Wisconsin and Iowa and others into this facility.”

Rockford’s indoor sports facility would be the largest of its kind in northern Illinois, Ryan said, making its closest competitor the Wisconsin Dells area, which boasts four indoor soccer fields, 14 indoor basketball courts and 14 indoor volleyball courts.

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City officials are in talks with the Rockford School District to establish ample parking for the athletic facility. The future of the former District 205 administration building at 201 S. Madison St. is unclear, but the parking lot south of that building, along with adjacent parcels on a lower elevation, would provide the parking solution.

“Whether or not the existing school district building stays or goes, we can get 500 parking spaces combined between the upper and lower tiers,” Ryan said. “That is more than enough to accommodate this tournament venue.”

The city may give aldermen an intergovernmental agreement to consider in the coming weeks that specifies roles and responsibilities of the city and school district in regard to the parking discussions.

The city bought the Ingersoll building in 2002 for $2 million. It would likely transfer ownership to the park district once the athletic facility is up and running.

The city would sell bonds, backed by the Redevelopment Fund and other sources, to pay for the project. Thus far, committed funds to the Ingersoll makeover include a $3.1 million RiverEdge grant that the state has awarded Rockford.

Additionally, the city is redirecting a $4 million grant the state pledged to lure Embry-Riddle Aeronautical University here, a prospect that fizzled last year when the aviation school postponed plans to build a third residential campus.

The other potential $4 million state grant would complement a cash contribution from the park district. Redevelopment Fund dollars would fill the remaining gap, and the fund would be tapped further if the potential state grant doesn’t come through.

The Ingersoll makeover is intended to lure visitors and the dollars they spend to Rockford. City residents will be able to enjoy the facility, too, Zuroske said.

The facility would be used by the school district for intramural athletic clubs, especially after school from 3:30 to 5:30 p.m., and the city is talking to Rockford Mass Transit District officials about providing transportation, he said.

“The census tracts that are in and around the Ingersoll building are the most economically and really demographically challenged in the city, certainly in the state, and even nationally if you start to look at the statistics,” Zuroske said.

There is significant crime involving youth 22 and younger near the Ingersoll building, he said, and the park district is intent on establishing youth recreation programs there.

“This isn’t a panacea, but it certainly gives us a great opportunity to get some of those kids off the street and into this facility, where they’d get some recreation opportunities, providing some structure,” Zuroske said.

Visit reclaimingfirst.org for a detailed overview of the Reclaiming First project. The website provides details on cost projections, funding sources, site plans, revenue projections and an analysis of competitive facilities.